If you're like most people, buying a home is the biggest investment you'll ever make. Annual mortgage, taxes and insurance costs can range from 25% to 40% of your gross annual income. By visiting this reference page, you're on your way to protecting yourself, and making the home-buying process easier by becoming an informed consumer.
Read, call me or talk to your real estate professional. You'll be glad you took the time to understand the process.
- Looking for a home without being pre-approved.
Pre-approval and pre-qualification are two different things. During the pre-qualification process, a loan officer asks you a few questions, then hands you a "pre-qual" letter. The pre-approval process is much more thorough. During the pre-approval process, the mortgage company does virtually all the work associated with obtaining full-approval. Since there is no property yet identified to purchase, however, an appraisal and title search aren't conducted. When you're pre-approved, you have much more negotiating clout with the seller. The seller knows you can close the transaction because a lender has carefully reviewed your income, assets, credit and other relevant information. In some cases (multiple offers, for example), being pre-approved can make the difference between buying and not buying a home. Also, you can save thousands of dollars as a result of being in a better negotiating situation.
Most good Realtors® will not show you homes until you are pre-approved. They don't want to waste your, their, or the seller's time. We will help you get pre-approved. We will need to check your credit and verify your income and assets.
- Making verbal (oral) agreements!
If an agent tries to make you sign a written document that is contrary to their verbal commitments, don't do it! For example, if the agent says the washer will come with the home, but the contract says it will not--the written contract will override the verbal contract. In fact, written contracts almost always override verbal contracts. When buying or selling real estate, abide by this maxim: Get it in writing!
- Choosing a lender because they have the lowest rate. Not getting a written good-faith estimate.
While rate is important, you have to consider the overall cost of your loan. Pay close attention to the APR, loan fees, discount and origination points. Some lenders include discount and origination points in their quoted points. Other lenders may only quote discount points, when in fact there is an additional origination point (or fraction of a point). This difference in the way points are sometime quoted is important to you. One lender will quote all points, while another lender may disclose an extra point, or fraction thereof, at a later time--an unwelcome surprise. We will provide you with a written good-faith estimate (GFE) of closing costs. You can educate yourself regarding the costs associated with your transaction. The GFE with the highest costs may not indicate that a particular lender is more expensive than another--in fact, they may be more diligent in itemizing all fees. The cost of the mortgage, however, shouldn't be your only criteria. You must feel comfortable that we are committed to your best interest and we will deliver what we promise.
- Choosing a lender because they are recommended by your neighbors.
Your Realtor is not a financial expert. He or she may not know which loan is best for you. As a result of their experience in the marketplace, the Realtor® may refer you to a lender who will close your loan. Although most Realtors® are professionals and concerned about your best interests, you should do your own homework and check their references. There are countless stories of consumers who ended up paying higher rates, or got a loan that wasn't right for them, because they blindly followed their neighbor's advice.
- Buying furniture before closing on the house.
When a mortgage company tells you they have approved your loan, do not go out and start shopping for furniture, appliances etc. Many buyers do not wait for the closing before shopping for their new house. Almost all mortgage companies do a credit check before closing to make sure that your credit score and debt ratios are the same as when the loan was originated. Please consult with me before shopping for any big ticket item.
- Using a agent from the advertisements (an agent who advertises may not be familiar with the marketplace of your choice).
In most situations, agents work with seller by referral and maybe advertising and selling a house in the marketplace where they may not be experts. If you are a buyer, it is usually better to have a qualified agent representing you. I have a list of qualified realtors in the area you are looking for and can refer you to them (usually agents qualify to be on this list based on past experiences of our clients and their testimonials). In that case, please call me and I will gladly refer you to an expert agent.
- Buying a home without professional inspections. Taking the seller's word that repairs have been made.
Unless you're buying a new home with warranties on most equipment, it is highly recommended that you get property, roof and termite inspections. These reports will give you a better picture of what you're buying. Inspection reports are great negotiating tools when it comes to asking the seller to make repairs. If a professional home inspector states that certain repairs need to be made, the seller is more likely to agree to make them. If the seller agrees to make repairs, have your inspector verify the completed work prior to close of escrow. Do not assume that everything will be done as promised. We have a list of certified home inspectors for New Jersey.
- Not shopping for home insurance until you are ready to close.
Start shopping for insurance as soon as you have an accepted offer. Many buyers wait until the last minute to get insurance and find they have no time left to shop around. We can assist you with referring you to qualified home insurance agents in the area.
- Signing documents without reading them.
Do not sign documents in a hurry. As soon as possible, review the documents you'll be signing at the closing with your attorney. closing--includes a copy of all closing documents. This way, you can review them and get your questions answered in a timely manner. Do not expect to read all the documents during the closing. There is rarely enough time to do that. We can provide you with a list of lawyers that we have closed with
- Making moving plans that don't work.
You expect to move out of your current residence on Friday and into your new residence over the weekend. Also on Friday, your lease terminates and the movers are scheduled to appear. Friday morning arrives: bags packed, boxes stacked, children under arm and the dog on a leash; you're sitting on your front door stoop awaiting the arrival of the movers. Your phone rings. Your loan closing is delayed until the following Tuesday. The new tenants turn into your driveway with a weighted-down U-Haul and the movers pull up across the street. You ask yourself, "Where's the nearest Motel and storage facility? How much will the movers charge for an extra trip? Can we afford it?" How can you avoid such a disaster? Schedule the movers to show up five to seven days after you anticipate closing your transaction. Consider the delay and extra expense an insurance policy. You're buying peace of mind--and protecting yourself from expensive delays. |